Global urbanization trends and climate changes result in a significant pressure for a future development of urban areas. The construction industry can play a primary role in addressing some of the challenges, but in order to make it happen, the phases of design, construction, use and deconstructio of a building should meet the criteria of sustainability. The closed loop approach can help the construction industry to move in the right direction.  This thesis analysis the closed loop approach to identify its potential contribution in solving the sustainability challenges in urban areas, as well as explores the key aspects helping or hindering the implementation of the approach. The methods used for the research include the framework for strategic sustainable development, case study analysis and interviews with experts in the field. The research exposed several gaps in the use of the approach moving towards sustainability, mainly due to the fact that the unique and shared definition of it is missing and neither actions nor tools are suggested for a successful implementation of the approach. Main barriers are related to the material choice, flexibility of the design, communication and legislation aspects, work with supply chain and interaction with stakeholders. Nonetheless most of them are also seen as potential enablers. Recommendations are provided to help overcoming the existing barriers and valorizing the key enablers, but the clear definition of the approach is necessary to exploit potentialitie of the closed loop approach.